Ahead of Earnings: A Tale of Two RIMMs

Ahead of its earnings report after the bell, there are two conflicting storylines at Research In Motion.

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In one, RIM’s revenues and earnings are off the charts as the company sells more smartphones in more markets than ever. The company announced last quarter that it had shipped a record 12.1 million handsets and that 45% of those were outside the U.S.

But the other storyline is less flattering: while RIM’s subscriber base is growing, its net new subscriber growth rate appears to have peaked at just under 5 million per quarter. That’s not what you want to see in the face of increased competition from Android and the iPhone . If that weren’t enough, RIM’s gross margins have dropped at the same time. Bad combination. (For more on those trends, see this excellent writeup by Michael Mace)

So. This afternoon’s earnings release is all about which storyline wins out. Yes, revenue and earnings will be higher. But unless the subscriber growth rate and margins pick up too, the stock could be vulnerable to a bear attack.